The Emirates Insurance Federation, referring to hikes in motor insurance premiums, has said that it is natural for insurance companies to raise their premium rates to compensate for losses and to re-adjust their operations.
The federation also says that insurers have the right to raise the premiums to the maximum permissible limit, reported Emirates Today.
The statement follows complaints by policyholders, seeking to renew their motor policies, who said that compulsory motor third-party liability insurance premiums were raised by between 33% and 41%. The prices of comprehensive motor policies have also been increased by percentages ranging between 20% and 25% compared to 2023.
Some policyholders also said that they had been forced to purchase third-party liability insurance as comprehensive auto insurance policies became too expensive.
The chairman of the Automobile Committee of the Emirates Insurance Federation, Mr Mohammed Mazhar Hamadeh, said, “Insurance companies have paid a lot of compensation recently, and some companies have losses. Therefore, it is natural for these companies to raise their prices to compensate for these losses and re-adjust their operations. They have the right to raise the price to the maximum permissible limit for the policy price.”
He said that the motor insurers in the UAE compete within the minimum and maximum price limits set by the regulatory authorities.
He added that in previous situations, insurance companies had offered discounts and lowered their prices, and there was great competition in the market. “But the situation is somewhat different now, and there is an urgent need to raise prices according to market conditions and to seek to achieve profits,” he said.
One reason for the price hikes this year is the unprecedented heavy rains recorded in April, resulting in flooding in many parts of the country, especially Dubai, Sharjah, and Ajman, according to a report by Khaleej Times. The UAE recorded the heaviest rainfall in 75 years on 16 April. Insurance companies were inundated with vehicle and house claims against damages incurred with some insurers posting a 400% jump in claims.